Online ROI Calculator (Return on Investment)
Understanding Return on Investment (ROI)
Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment's cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed in percentage, usually, or sometimes as a ratio.
Formula:
ROI = ((Revenue Generated – Initial Investment Cost) / Initial Investment Cost) * 100
In this calculator, we also consider the time period over which the investment generated revenue. While ROI itself doesn't inherently include a time factor, annualized ROI is a crucial metric for comparing investments made over different durations. The annualized ROI is calculated by taking the total ROI and dividing it by the number of years the investment was held.
Annualized ROI Formula:
Annualized ROI = (Total ROI / Time Period in Years)
How to Use the Calculator:
Enter the total amount you initially invested in the "Initial Investment Cost" field. Then, input the total revenue generated from that investment in the "Revenue Generated" field. Finally, specify the duration in months for which this revenue was generated in the "Time Period (Months)" field. Click "Calculate ROI" to see your investment's profitability and its annualized return.
Example:
Let's say you invested $10,000 in a small business venture (Initial Investment Cost). Over 18 months (Time Period), this venture generated $25,000 in revenue (Revenue Generated).
- Total ROI: (($25,000 – $10,000) / $10,000) * 100 = 150%
- Time Period in Years: 18 months / 12 months/year = 1.5 years
- Annualized ROI: 150% / 1.5 years = 100% per year
This means your investment not only doubled its initial cost but did so at an average rate of 100% per year.
function calculateROI() {
var investmentCost = parseFloat(document.getElementById("investmentCost").value);
var revenue = parseFloat(document.getElementById("revenue").value);
var timePeriod = parseFloat(document.getElementById("timePeriod").value);
var resultsDiv = document.getElementById("results");
resultsDiv.innerHTML = ""; // Clear previous results
if (isNaN(investmentCost) || isNaN(revenue) || isNaN(timePeriod) || investmentCost <= 0 || timePeriod <= 0) {
resultsDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var netProfit = revenue – investmentCost;
var totalROI = (netProfit / investmentCost) * 100;
var timePeriodInYears = timePeriod / 12;
var annualizedROI = totalROI / timePeriodInYears;
var resultHTML = "
Calculation Results:
";
resultHTML += "
Initial Investment Cost: $" + investmentCost.toFixed(2) + "";
resultHTML += "
Revenue Generated: $" + revenue.toFixed(2) + "";
resultHTML += "
Time Period: " + timePeriod + " months (" + timePeriodInYears.toFixed(2) + " years)";
resultHTML += "
Net Profit: $" + netProfit.toFixed(2) + "";
resultHTML += "
Total Return on Investment (ROI): = 0 ? "green" : "red") + ";'>" + totalROI.toFixed(2) + "%";
if (timePeriodInYears > 0) {
resultHTML += "
Annualized ROI: = 0 ? "green" : "red") + ";'>" + annualizedROI.toFixed(2) + "% per year";
}
resultsDiv.innerHTML = resultHTML;
}
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